Panasonic (TYO: 6752), a major supplier of batteries to Tesla (Nesdaq: TSLA), warns of potential weaknesses in its automotive battery business due to a slowdown in the adoption of electric vehicles (EVs) in the United States. 

Yuki Kusumi, the chief executive of Panasonic, said at a roundtable interview with reporters in Tokyo on Tuesday that the company may delay investing in additional plants to boost its automotive battery capacity in North America as a result of this trend. The CEO spoke of a “huge drop in demand for batteries used in specific models” but did not name the car brand.

Kusumi emphasized the need to control the speed of investment based on the pace at which EVs are spreading, suggesting that Panasonic will not build a third battery plant in North America with its energy unit in the near future. The company is closely monitoring its Chinese supply chain and battery material procurement following China’s move to tighten graphite export controls last year.

Despite the slowdown in EV adoption, Kusumi expressed confidence that Panasonic’s vehicle battery business will turn profitable in fiscal 2026-2027, even without US government subsidies. The battery business is already profitable in North America, but it is struggling due to weak demand in Japan. Kusumi believes that the business will be entirely profitable if demand in Japan revives.

Panasonic’s battery business posted a loss of 18.7 billion yen in fiscal 2023 and is forecast to lose 17 billion yen in fiscal 2024. Kusumi emphasized the importance of government support for battery production, saying that automobiles are the last key industry for the country and batteries will underpin it. He also noted that EV adoption will increase if more chargers are available, dismissing the idea of a society solely reliant on hybrids or plug-in hybrids.

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